I knew the $15 billion automaker bailout was doomed yesterday when I saw it referred to by a Democratic pol as “Bush’s bailout.” This was squeezing the last bit of cover out of the soon-to-be former president in order to vote against the will of the American people. Too bad he was a wee bit premature.
One pundit has questioned the wisdom of the lame-duck Republicans in killing the bailout.
Congratulations GOP! You are now known as the only reason the American auto industry went down the tubes and the highly newsworthy blood of every disappearing auto sector job around the country will be on your hands. And all for a measly $15 billion – after you’d already given several times that to Wall Street.
This ignores the political mistake of bailing out the banking industry made by the Republicans (the bailout was vehemently opposed by the American public and opposition to it could have been used as a campaign issue against the Democrats during the ‘08 election) as well as the basic economic fact that banking is a critical industry to the functioning of our economy while car making is not. The argument that “we bailed out the banks so we should bail out the automakers” also ignore the fact that the two industries are struggling for very different reasons. The banks were overwhelmed by bad debt, in which case bankruptcy would have resulted in their dissolution, while automakers are tied by labor and supplier agreements which bankruptcy will remove allowing the companies to restructure.
The bottom line is that the automakers must restructure, and the bailout bill prevented that from happening. Anything that stands in the way of the restructuring only draws out the pain and makes the situation worse. Better to deal with the problem now than to carry the wounded automakers into the future at taxpayer expense.
Unfortunately at the time of writing it appears that the Treasury may step in and do the deed for Congress by raiding the $700 billion TARP fund. Rest assured that by doing this all the government has done is pushed forward the day of reckoning by a quarter or two. The Big 3 are still bleeding cash and producing cars that no one wants to buy, can’t buy even if they want to thanks to banks stockpiling cash instead of lending it, or can’t afford to buy given their household finances. With the $15 billion in hand, automakers and those who work for them or for the companies that supply them may breathe easier – but it would be a mistake to think that the crisis is over.
For decades the Big 3 have been producing too many cars and paying everyone too much to do their jobs. Statistics that I’ve seen show the Big 3 as paying autoworkers anywhere between $52-75/hour in salary and benefits. This does not include s0-called “job banks” where laid-off workers collect 90% of their pay while doing nothing but waiting for a job opening.
As a university educated family man who has spent the past 11 years working in information technology, it’s difficult to sympathize. I have seen my jobs sent to India and people imported from abroad to do jobs that paid only a fraction of the UAW salaries. I have never received severance pay of any type, let alone any that paid 90% of my working salary. I have had to adapt to the economy in order to keep a roof over my head and family fed without any safety net beyond the 6 months of $320/week state unemployment insurance. I have worked hard, learned new skills, and become flexible in order to to survive.
Why shouldn’t autoworkers have to do the same?
Now the finger pointing is in full swing. Nancy Pelosi calls the Republicans who voted against the bill “irresponsible”. However Nancy must be weak math. The Weekly Standard notices that 10 Republicans voted for the bailout. With those 10 the Democrats should have easily had the 60 votes needed to pass. So what happened?
Four Democrats voted ‘nay’: Baucus, Tester, Lincoln, and Reid.
Four Democrats did not vote: Biden, Kennedy, Kerry, and Wyden.
(And, of course, the Democrats would have another member right now if Blagojevich had sold that Senate seat before he was busted.)
Reid voted against on procedural grounds but that still leaves Baucus, Tester and Lincoln – plus Delaware’s own Joe Biden (?), Kennedy – who’s dying from brain cancer, Kerry (?) and Wyden (who?). Baucus and Tester are “Blue Dogs” who probably feel the same way the rest of America does about the bailout and voted accordingly. So are they now on Nancy’s Poo-poo List?